Trade & Environment Law in the Context of Sustainable Development

1. Trade & Environment Law in the Context of Sustainable Development Dr Markus Gehring, LL.M. (Yale) Lecturer in European and Int’l Law, Centre of Int’l Studies, University of Cambridge Lead Counsel, Trade, Investment & Competition, Centre for Int’l Sustainable Development Law Marie-Claire Cordonier Segger, MEM (Yale), LLB & BCL (McGill), BA Hons Director, Centre for Int’l Sustainable Development Law / Fellow, LRCIL, University of Cambridge

2. Sustainable Development in World Trade Law Outline: Part I: Introduction 1. Globalisation and Sustainable Development 2. Development of World Trade Law Part II: International Trade Law in the WTO 3. Trade and Environment in the WTO 4. Trade and Development in the WTO 5. Sustainable Development in WTO Disputes (Exercise) Part III: Outlook 6. Integrated Trade Law and Policy-Making 7. Conclusion

3. Part I - Sustainable Development … and Globalisation? • “Mutual Supportiveness of Trade & Environment” Rio Declaration / Agenda 21, 1992 Rio Earth Summit … • “Globalisation for Sustainable Development” Joburg Declaration / JPOI, 2002 Johannesburg World Summit on SD: “Globalization offers opportunities and challenges for sustainable development. We recognize that globalization and interdependence are offering new opportunities to trade, investment and capital flows and advances in technology, including information technology, for the growth of the world economy, development and the improvement of living standards around the world. At the same time, there remain serious challenges, including serious financial crises, insecurity, poverty, exclusion and inequality within and among societies.”

4. Part I -Introduction to International Trade Law 1. GATT/International Trade History 2. The World Trade Organization (WTO) 3. Governance Structure of the WTO 4. Key concepts – Tariffs, Most Favoured Nation and National Treatment, Non-discrimination 5. Dispute Settlement 6. Reform – Trade Negotiations

5. 1. The General Agreement on Tariffs and Trade (GATT) / International Trade History - one of the oldest areas governed by int’l rules- multi-layered trading system: bilateral, regional, intra-regional and global- provisional set of rules - originally 23 contracting parties - enacted 1 January 1948 - terminated 31 December 1995- negotiated eight multilateral trade "rounds" - reduced tariffs, attempted to reduce other trade barriers - converted int’l trade to a rules-based system

6. 2. The World Trade Organization - Objectives ?- Main functions: implementation, administration and operation of the covered agreements; negotiation of trade agreements; settlement of trade disputes; review of trade policies; fostering coherence in policy making- Pillar structure: GATT, GATS, TRIPS and horizontal agreements: DSU, TPRM and plurilateral agreements

7. 3. Governance Structure of the WTO

8. 4. Key Concepts - Tariffs -Tariffs (reciprocal and mutually advantageous basis) - Actual value tariffs- Tariff schedules (Art. II GATT)- Tariffication of other barriers to trade- Brussels Convention on Tariff Classification- Harmonized system of customs classification

9. 4. Key Concepts – Most Favoured Nation Principle - Art. I GATT – Any advantage, favour, privilege, or immunity in negotiated concessions extends to all WTO members.- Unconditionally, like products, de facto discrimination- Rationale of MFN - Important exceptions: Grandfathered preferences, Art. XXIV on RTAs, Enabling Clause, Waivers such as for the Cotonou Agreement.

10. 4. Key Concepts – National Treatment - Art. III GATT prohibits discrimination of foreign producers vis-à-vis domestic producers - Early GATT jurisprudence: a formally origin neutral taxation can violate Art. III:2 GATT- Centrality of likeness- Non-fiscal measures (Art III:4 GATT)- Relationship with Art. XX GATT

11. 5. Dispute Settlement - Integrated dispute settlement system based on Articles XXII and XXIII GATT and the DSU- Function of the DSB- Coverage: goods, services and intellectual property - Procedures: strict time-limits - Adoption of panel reports: negative consensus principle - Appellate Body Review - Non-compliance with recommendations

12. 5. Dispute Settlement - Consultation phase - Panels (Art. 6-8 DSU)- Panel process (Art. 12 DSU) - Panels time periods (Appendix 3) - Appeals process (Art. 17 pp. DSU)- Adoption of reports- Compliance - (Cross) retaliation

13. 6. Trade negotiations - Ministerial Conference  between Green rooms and NGO scrutiny- Consensus decision making (Art. XI WTO) - Panels time periods (Appendix 3) - Trade negotiation committee- Doha-Round: Agriculture as the most contested issue (initially also competition and investment)- Draft Hong Kong Ministerial Declaration

14. Part II - Rapid Evolution in Law and Policy on Trade, Environment & Development • Physical linkages (impacts) - Complex relationships- Neither good nor bad (shades of grey) • Legal linkages - Three distinct bodies of international law- Areas of intersection and integration • Institutional linkages - WTO vis-à-vis MEA Secretariats and IGOs, - UNEP, UNDP - National and international NGOs

15. 2. Part II – Different Perspectives • The trade perspective • Economic growth through trade will solve all environmental problems • The environment perspective • The environment is threatened by the status quo • The development perspective • Poverty needs first and foremost policy attention

16. Part II – Global Environmental Management Trade Measures: - Trade ban - Protection provisions - Trade restrictions - Trade prohibition 3. Part Trade Measures: - Cartagena Protocol: control of LMOs - Kyoto Protocol: Trade links Trade Measures: - Trade restriction - Trade ban Principal MEAs • Early Agreements - CITES - UNCLOS - Basel Convention - Montreal Protocol • Rio Agreements - CBD - Desertification - Climate Change • New Generation - PICs - POPs

17. WTO Agreement Trade in Goods GATT TBT SPS Trade in Services GATS Trade in IPRs TRIPS Part II – Relevant WTO Provisions • Preamble; Art. V. 2 • Art. III, XX GATT • Art. 2.2, 2.6 TBT • Art. 2.1, 5 SPS • Art. XIV GATS • Art. 7, 30 TRIPS • And new Doha Negotiations

18. Part II – Trade and Development • Growing membership of developing countries • New Development Theory • GATT: Article XVIII • GATT: Part IV • Enabling Clause • The WTO Agreements

19. Part II- WTO Disputes (Exercise) Instructions for exercise: Form a working group, with a rapporteur and chair. In 20 – 30 min, answer the following questions for your case: • What are the main trade provisions at stake? • What are the environment issues? • How would the WTO AB resolve the case in trade law (3 – 4 elements of a solution)? • What do you think is a ‘sustainable’ solution? • US – Shrimp Turtle Case (GATT) • EC – Asbestos Case (GATT) • EC – Beef Growth Hormones Case (SPS / TBT) • EC – Biotech (SPS / TBT)

20. Part II- WTO Disputes Cases for Exercise: • US – Shrimp Turtle Case (GATT) • EC – Asbestos Case (GATT) • EC – Beef Growth Hormones Case (SPS / TBT) • EC – Biotech (SPS / TBT)

21. Important GATT rules

22. Important WTO rules

23. Part II- WTO Disputes (Exercise Solutions) • US – Gasoline / US – Tuna Dolphin Cases… • US - Shrimp Turtle Case WTO AB: the objective of sustainable development “must add colour, texture and shading to our interpretation of… the WTO Agreement.” • EC – Beef Growth Hormones WTO AB: the precautionary principle is incorporated in Art 5.7 of the SPS Agreement, though this does not exhaust relevance. • EC – Asbestos WTO AB:Carcinogenicity is relevant to product likeness, and ban could be “necessary for… human health…” • EC - Tariff Preferences CaseWTO AB: EC Tariff preferences were not based on sustainable development objectives. • EC - Biotech

24. Part III – Outlook: Integrated Trade Law and Policy-Making • Development that can meet the needs of the present without compromising the needs of future generations (Brundtland Report) • Reconciliation of development and environmental objectives (ICJ in Gabcikovo-Nagymaros Case) • Balance / integration / mutual support between economic growth, social justice and environmental protection objectives (WTO AB Report from US – Shrimp Dispute)

25. Part III - Outlook An integrated agenda for the ongoing ‘Doha Development Round’ in the WTO (1) • Procedural integration: - consultations in CTE & CTD, - sustainability impact assessment (inc. human rights impact assessment), - transparency & participation (WTO Symposia), - reform of dispute settlement procedures (amicus curia briefs, public hearings), - other proposals?

26. Part III - Outlook An integrated agenda for the ongoing ‘Doha Development Round’ in the WTO (2) • Substantive integration (beyond ‘the sandbox’) - standards (TBT, SPS), - agriculture, - intellectual property rights, - investment - services - and other negotiations?

27. Part III - Outlook • Innovations in regional trade agreements and (integration) processes: - the European Union, - the Mercosur / Andean Com / CAC - the NAFTA / NAAEC / NAALC & BTAs - the SADC / ASEAN - the FTAA...? - the EU – ACP Cotonou Agreement EPAs..?

28. Conclusions • Current WTO negotiations and cases reflect that the objective of sustainable development has become an integral part of the world trading system. • Legal arguments encompassing an integrated developmental and environmental approach have been made by the parties and accepted by the relevant trade dispute settlement organs. • However, WTO dispute settlement organs will not lightly accept sustainable development as a trump card. A solid legal understanding of the objective and its underlying principles is required to make a successful sustainable development argument in world trade law.

29. Thank you.www.cisdl.org Markus W. Gehring / mwg24@cam.ac.uk Marie-Claire Cordonier Segger / mccs2@cam.ac.uk